17.24 Tomlinson corporation is a biotech company based in Milpitas. It makes a c

Question

17.24

Tomlinson corporation is a biotech company based in Milpitas. It makes a cancer- treatment drub in a single processing department. Direct maaterials are added ad the start of the process. Conversion costs are added evenly during the process. Tominson uses the weighted average method of process costing. The following information for july 2014 is available

17.25

1. Do exercise 7-24 using the fifo method

2. tomlinson’s management seeks to have a more consistent cost per equivalent unit. Which method of prcess costing should the company choose and why?

Explanation / Answer

Answer:

Tomlinson Corporation Equivalent Units Tomlinson Corporation Cost of Production Report Physical Flow D/M Conversion Degree of Completion Added Beginning Evenly Units to Account for: D/M Conversion BWIP (7/1/11) 100% 25% 8,700 Started during April 34,500 Total 43,200 Units Accounted for: Work Done This Period Completed Units 32,000     From BWIP 0% 75% 8,700 0 6,525 B     Started And Completed 100% 100% 23,300 23,300 23,300 C EWIP 100% 70% 11,200 11,200 7,840 D Total 43,200 Calculation of Equivalent Units FIFO Equivalent Units (A) 34,500 37,665 B+C+D Plus BWIP EU from previous period 8,700 2,175 A Weighted Average Equivalent Units (B) 43,200 39,840 A+B+C+D Costs to Account for: D/M Conversion Total BWIP $61,500 $43,200 $104,700 A Current Costs Added This Period (1) 301,380 498,624 800,004 B,C,D Total (2) $362,880 $541,824 $904,704 A,B,C,D Cost per Equivalent Unit: FIFO (1) / (A) $8.736 $13.238 $21.974 Weighted Average (2) / (B) $8.400 $13.600 $22.000 Standard Cost $8.250 $12.700 $20.950 Costs Accounted for: Fifo Method Costs Associated with Completed Units From BWIP     Costs Assigned to BWIP $61,500 $43,200 $104,700 A     D/M $0 $0 B     Conversion Costs $86,381 $86,381 B         Total $61,500 $129,581 $191,081 $21.963 From Units Started & Completed $203,541 $308,455 $511,995 $21.974            Total Cost Associated with Units Transferred-out $265,041 $438,035 $703,076 $21.971 Cost Assigned to EWIP Units D/M Costs $97,839 $97,839 Conversion Costs $103,789 $103,789     Total Cost Assigned to EWIP $97,839 $103,789 $201,628 Total Costs Accounted for $362,880 $541,824 $904,704 Costs Accounted for: Weighted Average Method Costs Associated with Completed Units 32,000 $268,800 $435,200 $704,000 $22.00 $704,000 Cost Assigned to EWIP Units D/M Costs $94,080 $94,080 Conversion Costs $106,624 $106,624     Total $94,080 $106,624 $200,704 Total Costs Accounted for $362,880 $541,824 $904,704 Costs Accounted for: Standard Cost Method Costs Associated with Completed Units From BWIP     Costs Assigned to BWIP (assuming same std. costs values) $71,775 $27,623 $99,398     D/M $0 $0     Conversion Costs $82,868 $82,868         Total $71,775 $110,490 $182,265 $20.95 $182,265 From Units Started & Completed $192,225 $295,910 $488,135 $20.95 $488,135            Total Cost Associated with Units Transferred-out $264,000 $406,400 $670,400 $20.95 $670,400 $264,000 $406,400 Cost Assigned to EWIP Units $670,400 D/M Costs $92,400 $92,400 Conversion Costs $99,568 $99,568     Total Cost Assigned to EWIP $92,400 $99,568 $191,968 Total Standard Costs Accounted for $356,400 $505,968 $862,368 Standard Cost Variances Associated with BWIP and recognized last time period (favorable) (10,275) 15,578 5,303 Associated with current period (favorable) 16,755 20,279 37,034      Total cost accounted for $362,880 $541,824 $904,704 Journal Entries for FIFO, W/A, and Standard Cost Methods Fifo Method Weighted Average Method Standard Cost Method Dr Cr Dr Cr Dr Cr Work-in-Process 301,380 301,380 284,625 $284,625 DM Variances (16,755)     Direct Materials Inventory 301,380 301,380 301,380         To record direct materal usage. Work-in-Process 498,624 498,624 478,346 $478,346 Conversion Variances 20,279     Various Accounts 498,624 498,624 498,624         To record direct labor and MOH usage. Finished Goods 703,076 704,000 670,400     Work-in-Process 703,076 704,000 670,400         To record the transfer production costs of completed         units to finished goods. FIFO Weighted Average Std. Cost WIP WIP WIP 104,700 104,700 99,398 301,380 703,076 301,380 704,000 284,625 670,400 498,624 498,624 478,346 201,628 200,704 191,968 0.0289

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